Powell: Achieving soft landing is "very challenging" | Many retirees say they should have started saving sooner | Bill would allow penalty-free Sec. 529 plan rollovers to Roth IRAs
The Federal Reserve is "strongly committed to bringing inflation back down, and we are moving expeditiously to do so," Chair Jerome Powell has testified before a congressional committee as part of a semiannual report on monetary policy. However, Powell has conceded that achieving a soft landing "is going to be very challenging" and that a recession is possible. (Related calculator: The impact of inflation -- PFP/PFS members)
Many retirees who responded to an Employee Benefit Research Institute survey expressed regrets about past financial behaviors, with 70% indicating that they would advise their younger selves to start saving earlier or to put away more money. The study also found that most of those who had worked with a financial professional to develop a plan were generally satisfied with the experience, with many pointing to the benefit of "understanding how to turn their retirement savings into an income stream." (Related calculator: Saving for retirement -- PFP/PFS members)
A bipartisan bill introduced in the Senate would allow penalty-free rollovers of unused Sec. 529 plan balances into Roth IRAs. Families currently face potential income taxes and penalties for withdrawals from Sec. 529 accounts that don't go toward qualified education expenses. (Related guide: Education planning)
Advisers have an important role to play in guiding their clients amid inflation, rising interest rates and an economy that faces recession risks. In this environment, it might be worth considering assets such as dividend-paying stocks and real estate, according to this article. (Related podcast: Helping clients in a volatile market)
The shortfall in Social Security funding means that millennial workers could see their benefits reduced by 20%, although policymakers could address the issue in certain ways, such as by raising the full retirement age or increasing the payroll tax rate. Millennials could help close the gap by saving a little bit more each year or delaying the age at which they claim benefits. Related guide: (Social Security planning -- PFP/PFS members)
Many Americans want to be sure their investment strategies align with a growing interest in environmental, social and governance issues. Financial advisers should be ready to discuss this subject with their clients, including the benefits and potential limitations of ESG-focused strategies. (Related podcast: Pros and cons of ESG investing)
It's worth reviewing client's estate plans in light of the 10-year withdrawal rule for IRAs that affects many nonspousal beneficiaries under the SECURE Act. Using Roth IRAs or passing on assets held in taxable accounts could be appealing options. (Related podcast: The ins and outs of the new SECURE Act proposed regulations)
Unless Congress takes action, the rate at which Social Security replaces pre-retirement income will plunge from 38% today to just 27% in 2035, according to one estimate. These numbers can help clients understand the size of the gap they may need to fill in retirement. (Related podcast: The future of Social Security)
Planning for LGBTQ+ clients may involve some special considerations, including the fact that life events such as having children may involve additional costs. Reviewing insurance policy beneficiary designations is crucial, and tools such as durable powers of attorney can ensure that the correct person is able to make medical decisions. (Related topic discussion: Parental rights issues for unmarried couples -- PFP/PFS members)
More people than ever are in the market for retirement advice, and information technology is helping to change the business of delivering it. Here is a closer look at these and other trends, including the enduring value of financial planning with a human touch. (Related podcast series: Deeper CPA financial planner connections)
Personal financial planning distinguished service award
Lisa Featherngill, CPA/PFS, was presented with the AICPA's 2022 Personal Financial Planning (PFP) Distinguished Service Award, which recognizes an AICPA member who meritoriously contributes to the advancement of personal financial planning, best exemplifies a CPA financial planner and serves the public's interest by enhancing the quality of personal financial planning services. Featherngill is the senior vice president, national director of planning at Comerica in Winston-Salem, N.C.
Using oil and gas investments to offset passive losses
If you have clients with large passive loss carryforwards and you're looking for ways to absorb these sooner rather than later, investing in oil and gas may be your answer. In this podcast episode, join expert Dave Dyer, JD, as he is interviewed by Bob Keebler, CPA/PFS, to fill you in on the opportunities.
The AICPA's Personal Financial Planning Section is the premier provider of information, tools, advocacy and guidance for advisors who specialize in providing estate, tax, retirement, risk management and/or investment planning advice to individuals, families and business owners.
About the CPA/PFS Credential: The Personal Financial Specialist program allows CPAs to gain and demonstrate competence and confidence in providing estate, tax, retirement, risk management and/or investment planning advice to individuals, families and business owners through experience, education, examination, and a resulting credential.
AICPA Personal Financial Planning Section Resources